# Biofuels Incentives: A Summary of Federal Programs

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URL: https://www.frixlaw.com/law-library/documents/crs%3ARL33572

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** July 29, 2008
- **Citation:** RL33572

## Text

Order Code RL33572

Biofuels Incentives:
A Summary of Federal Programs

Updated July 29, 2008

Brent D. Yacobucci
Specialist in Energy and Environmental Policy
Resources, Science, and Industry Division

Biofuels Incentives:
A Summary of Federal Programs
Summary
With recent high energy prices and the passage of major energy legislation in
2005 (P.L. 109-58) and 2007 (P.L. 110-140), there is ongoing congressional interest
in promoting alternatives to petroleum fuels. Biofuels — transportation fuels
produced from plants and other organic materials — are of particular interest.
Ethanol and biodiesel, the two most widely used biofuels, receive significant
government support under this law in the form of mandated fuel use, tax incentives,
loan and grant programs, and certain regulatory requirements. The 24 programs and
provisions listed in this report have been established over the past 27 years, and are
administered by five separate agencies and departments: Environmental Protection
Agency, U.S. Department of Agriculture, Department of Energy, Internal Revenue
Service, and Customs and Border Protection. These programs target a variety of
beneficiaries, including farmers and rural small businesses, biofuel producers,
petroleum suppliers, and fuel marketers. Arguably, the most significant federal
programs for biofuels have been tax credits for the production or sale of ethanol and
biodiesel. However, with the establishment of the renewable fuels standard (RFS)
under P.L. 109-58, Congress has mandated biofuels use; P.L. 110-140 significantly
expanded that mandate. In the long term, the mandate may prove even more
significant than tax incentives in promoting the use of these fuels.
The 2008 Farm Bill — The Food, Conservation, and Energy Act of 2008 —
amended or established various biofuels incentives, including lowering the value of
the ethanol excise tax credit, establishing a tax credit for cellulosic biofuel
production, extending import duties on fuel ethanol, and establishing several new
grant and loan programs.
This report outlines federal programs that provide direct or indirect incentives
for biofuels. For each program described, the report provides details including
administering agency, authorizing statute(s), annual funding, and expiration date.
The Appendix provides summary information in a table format.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Environmental Protection Agency (EPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Renewable Fuel Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Internal Revenue Service (IRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Volumetric Ethanol Excise Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Small Ethanol Producer Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Biodiesel Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Small Agri-Biodiesel Producer Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Renewable Diesel Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Credit for Production of Cellulosic Biofuel . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Special Depreciation Allowance for Cellulosic Ethanol Plant Property . . . . 4
Department of Agriculture (USDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bioenergy Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Renewable Energy Systems and Energy Efficiency Improvements . . . . . . . . 5
Value-Added Producer Grants Program (VAPG) . . . . . . . . . . . . . . . . . . . . . 6
Biorefinery Development Grants (Unfunded) . . . . . . . . . . . . . . . . . . . . . . . . 6
Business and Industry (B&I) Guaranteed Loans . . . . . . . . . . . . . . . . . . . . . . 6
Rural Business Enterprise Grants (RBEG) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Other USDA Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
New Farm Bill Programs Under USDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Biorefinery Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Repowering Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Bioenergy Program for Advanced Biofuels . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Feedstock Flexibility Program for Producers of Biofuels (Sugar) . . . . . . . . . 8
Biomass Crop Assistance Program (BCAP) . . . . . . . . . . . . . . . . . . . . . . . . . 9
Department of Energy (DOE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Biomass Research and Development Initiative . . . . . . . . . . . . . . . . . . . . . . . 9
Biorefinery Project Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loan Guarantees for Ethanol and Commercial Byproducts from
Cellulose, Municipal Solid Waste, and Sugar Cane . . . . . . . . . . . . . . 10
DOE Loan Guarantee Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cellulosic Biofuels Production Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . 11
U.S. Customs and Border Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Import Duty for Fuel Ethanol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Appendix. Summary of Federal Incentives for Promoting Biofuels . . . . . . . . . . 12

List of Tables
Table 1. Federal Biofuels Incentives by Agency . . . . . . . . . . . . . . . . . . . . . . . . . 12

Biofuels Incentives:
A Summary of Federal Programs
Introduction
With recent high energy prices and the passage of the Energy Policy Act of 2005
(P.L. 109-58) and the Energy Independence and Security Act of 2007 (P.L. 110-140),
there is ongoing congressional interest in promoting greater use of alternatives to
petroleum fuels. Biofuels — transportation fuels produced from plants and other
organic materials — are of particular interest. Ethanol and biodiesel, the two most
widely used biofuels, receive significant federal support in the form of tax incentives,
loan and grant programs, and regulatory programs.1 The 2008 Farm Bill also
modified existing incentives — including ethanol tax credits and import duties —
and established a new tax credit for cellulosic biofuels.2 The Farm Bill also
authorized new biofuels loan and grant programs, but these will be subject to
appropriations, likely starting with the FY2010 budget request.
This report outlines 24 current, expired, or pending federal programs and
provisions (plus one authorized but unfunded program) that provide direct or indirect
incentives for biofuels. The programs are grouped below by administering agency.
The incentives for biofuels are summarized in the Appendix. This information is
compiled from authorizing statutes, committee reports, and Administration budget
request documents.

1

For more information on ethanol, see CRS Report RL33290, Fuel Ethanol: Background
and Public Policy Issues, by Brent D. Yacobucci. For more information on biofuels in
general, see CRS Report RL30758, Alternative Transportation Fuels and Vehicles: Energy,
Environment, and Development Issues, by Brent D. Yacobucci, and CRS Report RL32712,
Agriculture-Based Renewable Energy Production, by Randy Schnepf.
2

For more information on biofuels provisions in the Farm Bill, see CRS Report RL34239,
Biofuels Provisions in the 2007 Energy Bill and the 2008 Farm Bill: A Side-by-Side
Comparison, by Tom Capehart, Randy Schnepf, and Brent D. Yacobucci.

CRS-2

Environmental Protection Agency (EPA)
Renewable Fuel Standard
Administered by: EPA
Annual funding: N/A
FY2008 budget request: N/A
Established: 2005 by the Energy Policy Act of 2005, §1501 (P.L. 109-58); expanded
by the Energy Independence and Security Act of 2007, §202 (P.L. 110-140)
Scheduled termination: None
Description: The Energy Policy Act of 2005 established a renewable fuels standard
(RFS) for automotive fuels. The RFS was expanded by the Energy Independence and
Security Act of 2007. The RFS requires the blending of renewable fuels (including
ethanol and biodiesel) in transportation fuel.3 In 2008, fuel suppliers must blend 9.0
billion gallons of renewable fuel into gasoline; this requirement increases annually
to 36 billion gallons in 2022. The expanded RFS also specifically mandates the use
of “advanced biofuels” — fuels produced from non-corn feedstocks and with 50%
lower lifecycle greenhouse gas emissions than petroleum fuel — starting in 2009. Of
the 36 billion gallons required in 2022, at least 21 billion gallons must be advanced
biofuel. There are also specific quotas for cellulosic biofuels and for biomass-based
diesel fuel. On May 1, 2007, EPA issued a final rule on the RFS program detailing
compliance standards for fuel suppliers, as well as a system to trade renewable fuel
credits between suppliers.4 While this program is not a direct incentive for the
construction of biofuels plants, the guaranteed market created by the renewable fuel
standard is expected to stimulate growth of the biofuels industry.

Internal Revenue Service (IRS)
Volumetric Ethanol Excise Tax Credit
Administered by: Internal Revenue Service
Annual funding: N/A
Established: 2005 by the American Jobs Creation Act of 2004, §301 (P.L. 108-357);
modified by the Food, Conservation, and Energy Act of 2008, §15331 (P.L. 110-234)
Scheduled termination: December 31, 2010
Description: Gasoline suppliers who blend ethanol with gasoline are eligible for a tax
credit of 51 cents per gallon of ethanol.
Qualified applicant: Blenders of gasohol (i.e., gasoline suppliers and marketers)
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds [http://www.irs.gov/publications/p510/ch02.html]
Note: The 2008 Farm Bill amended the credit: Starting the year after 7.5 billion
gallons of ethanol are produced and/or imported in the United States, the value of the
credit will be lowered to 45 cents per gallon — it is expected that the United States
will pass this mark in 2008.
3

The original requirement was for renewable fuel in gasoline. P.L. 110-140 expanded the
mandate to include all transportation fuels, and increased the amount of renewable fuel
mandated annually.

4

72 Federal Register 23899-24014.

CRS-3

Small Ethanol Producer Credit
Administered by: Internal Revenue Service
Annual funding: N/A
Established:1990 by the Omnibus Budget Reconciliation Act of 1990, §11502 (P.L.
101-508); extended by the American Jobs Creation Act of 2004, §301 (P.L. 108357); expanded by the Energy Policy Act of 2005, §1347 (P.L. 109-58)
Scheduled termination: December 31, 2010
Description: The small ethanol producer credit is valued at 10 cents per gallon of
ethanol produced. The credit may be claimed on the first 15 million gallons of
ethanol produced by a small producer in a given year.
Qualified applicant: Any ethanol producer with production capacity below 60
million gallons per year
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds [http://www.irs.gov/publications/p510/ch02.html]

Biodiesel Tax Credit
Administered by: Internal Revenue Service
Annual funding: N/A
Established: 2005 by the American Jobs Creation Act of 2004, §302 (P.L. 108-357);
extended by the Energy Policy Act of 2005, §1344 (P.L. 109-58)
Scheduled termination: December 31, 2008
Description: Biodiesel producers (or producers of diesel/biodiesel blends) can claim
a per-gallon tax credit. The credit is valued at $1.00 per gallon of “agri-biodiesel”
(biodiesel produced from virgin agricultural products such as soybean oil or animal
fats), or 50 cents per gallon of biodiesel produced from previously used agricultural
products (e.g., recycled fryer grease).
Qualified applicant: Biodiesel producers and blenders
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds [http://www.irs.gov/publications/p510/ch02.html]

Small Agri-Biodiesel Producer Credit
Administered by: Internal Revenue Service
Annual funding: N/A
Established: 2005 by the Energy Policy Act of 2005, §1345 (P.L. 109-58)
Scheduled termination: December 31, 2008
Description: The small agri-biodiesel producer credit is valued at 10 cents per gallon
of “agri-biodiesel” (see Biodiesel Tax Credit, above) produced. The credit may be
claimed on the first 15 million gallons of ethanol produced by a small producer in a
given year.
Qualified applicant: Any agri-biodiesel producer with production capacity below 60
million gallons per year
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds [http://www.irs.gov/publications/p510/ch02.html]

CRS-4

Renewable Diesel Tax Credit
Administered by: Internal Revenue Service
Annual funding: N/A
Established: 2005 by the Energy Policy Act of 2005, §1346 (P.L. 109-58)
Scheduled termination: December 31, 2008
Description: Producers of biomass-based diesel fuel made through a thermal
depolymerization process (or producers of diesel/renewable biodiesel blends) can
claim $1.00 per gallon tax credit. As defined by law, diesel fuel substitutes produced
through thermal processes are not considered “biodiesel,” and thus are ineligible for
the biodiesel credits.
Qualified applicant: Renewable diesel producers and blenders
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds [http://www.irs.gov/publications/p510/ch02.html]

Credit for Production of Cellulosic Biofuel
Administered by: Internal Revenue Service
Annual funding: N/A
Established: January 1, 2009, by the Food, Conservation, and Energy Act of 2008,
§15321 (P.L. 110-234)
Scheduled termination: December 31, 2012
Description: Producers of cellulosic biofuel can claim $1.01 per gallon tax credit.
For producers of cellulosic ethanol, the value of the credit is reduced by the amount
of the volumetric ethanol excise tax credit and the small ethanol producer credit (see
above) — currently, the value would be 40 cents per gallon. The credit applies to
fuel produced after December 31, 2008.
Qualified applicant: Cellulosic biofuel producers

Special Depreciation Allowance for Cellulosic Ethanol
Plant Property
Administered by: Internal Revenue Service
Annual funding: N/A
Established: 2006 by the Tax Relief and Health Care Act of 2006, §209 (P.L. 109432)
Scheduled termination: December 31, 2012
Description: A taxpayer may take a depreciation deduction of 50% of the adjusted
basis of a new cellulosic ethanol plant in the year it is put in service. The accelerated
depreciation applies only to cellulosic ethanol plants that break down cellulose
through enzymatic processes (as opposed to gasification). Any portion of the cost
financed through tax-exempt bonds is exempted from the depreciation allowance.
Qualified applicant: Any enzymatic cellulosic ethanol plant acquired after December
20, 2006, and placed in service before January 1, 2013. Any plant that had a binding
contract for acquisition before December 20, 2006, does not qualify.
For more information: See Senate Finance Committee, Summary of House-Senate
Agreement on Tax, Trade, Health, and Other Provisions, December 7, 2006.

CRS-5

Department of Agriculture (USDA)
Bioenergy Program
Administered by: Commodity Credit Corporation (CCC)
Annual funding: $100 million appropriated for FY2005, $60 million for FY2006; up
to $150 million authorized annually for FY2004 through FY2006
FY2008 budget request: $0
Established: FY2001 in response to Executive Order 13134 (August 12, 1999)
Developing and Promoting Biobased Products and Bioenergy, through CCC’s
general authority to conduct commodity programs; extended by the Farm Security
and Rural Investment Act of 2002, §9010 (P.L. 101-171)
Termination: End of FY2006
Description: The Bioenergy Program reimbursed ethanol and biodiesel producers for
expanding their production capacity. Payments helped defray the purchase cost of
the additional commodities needed for that expansion. The amount of each payment
was based on the change in production capacity, as well as the number of applicants
selected for funding. Eligible commodities included grain and oilseed crops (e.g.
barley, corn, soybeans), cellulosic crops (e.g. switchgrass, rice hulls), animal fats,
agricultural byproducts, and oils. For more information, see “Bioenergy Program for
Advanced Biofuels,” below.
Qualified applicant: Any ethanol or biodiesel producer who expanded production
capacity

Renewable Energy Systems and Energy
Efficiency Improvements
Administered by: Rural Business Cooperative Service
Annual funding: $23 million for all projects through FY2007, including biofuels
projects; $36 million for FY2008
FY2008 budget request: $34 million
Established: FY2003 by the Farm Security and Rural Investment Act of 2002, §9006
(P.L. 101-171); funding authorization for FY2007 reduced to $3 million by §1301
of the Deficit Reduction Act of 2005 (P.L. 109-171); full funding restored by
FY2007 Continuing Resolution (P.L. 110-5)
Scheduled termination: End of FY2007
Description: This program provides grants, loans, and loan guarantees for the
development of renewable energy projects and energy efficiency improvements. The
construction of a biofuel plant could be an eligible project. Grants are limited to 25%
of the costs of the project; loans are limited to 50% of the cost of the project.
Qualified applicant: Farmers, ranchers, and rural small businesses
For more information: [http://www.rurdev.usda.gov]

CRS-6

Value-Added Producer Grants Program (VAPG)
Administered by: Rural Business Cooperative Service
Annual funding: $15.5 million appropriated for FY2005; $20.5 million for FY2006;
$20.3 million for FY2007; $18.9 million for FY2008
FY2008 budget request: $15 million
Established: FY2001, expanded in FY2003 to include renewable energy projects by
the Farm Security and Rural Investment Act of 2002, §6401 (P.L. 101-171); the
Deficit Reduction Act of 2005, §1402 (P.L. 109-171), required that all previously
appropriated funds unobligated by October 1, 2006 be returned to the Treasury
Scheduled termination: End of FY2007
Description: VAPG provides grants to independent producers for the development
of value-added agricultural activities, including biofuel production. The grants can
be used for feasibility studies, the development of a business plan, or to acquire
working capital to operate a value-added business. Grants are limited to $500,000
per recipient.
Qualified applicant: Independent producer, producer group, cooperative, or a
majority-controlled producer-based business venture
For more information: [http://www.rurdev.usda.gov/rbs/coops/vadg.htm]

Biorefinery Development Grants (Unfunded)
Administered by: If funded, it would likely be administered by USDA’s Rural
Development Agency
Annual funding: $0
Established: 2002 by the Farm Security and Rural Investment Act of 2002, §9003
(P.L. 101-171)
Scheduled termination: End of FY2007
Description: This program was established by the Farm Security and Rural
Investment Act of 2002 (P.L. 101-171); however, no funding has been provided. If
funded, the program would provide grants for the development and construction of
biorefineries, including those that produce biofuels.
Qualified applicant: Virtually any non-federal entity (including a national laboratory)
or group of entities that plans to build a biorefinery
For more information: N/A

Business and Industry (B&I) Guaranteed Loans
Administered by: Rural Business Cooperative Service
Annual funding: Approximately $1 billion in loans are guaranteed annually
Scheduled termination: None
Description: This program provides guarantees for up to 90% of a loan made by a
commercial lender. Loan proceeds may be used for working capital, machinery and
equipment, buildings and real estate, and certain types of debt refinancing.
Qualified applicant: Virtually any legal entity.
For more information: [http://www.rurdev.usda.gov/rbs/busp/b&i_gar.htm]

CRS-7

Rural Business Enterprise Grants (RBEG)
Administered by: Rural Business Cooperative Service
Annual funding: Approximately $40 million in each of FY2005 through FY2007;
$38.7 million for FY2008
Scheduled termination: None
Description: RBEG provides grants to finance and facilitate development of small
and emerging private rural business enterprises. The grant is awarded to a third party
to assist a business; grant funds do not go directly to the business.
Qualified applicant: Public bodies, private nonprofit corporations, and federally
recognized Indian Tribal groups.
For more information: [http://www.rurdev.usda.gov/rbs/busp/rbeg.htm]

Other USDA Programs
The following programs within the Rural Business Cooperative Service could
possibly be used to assist biofuels producers indirectly:
!
!
!

Rural Economic Development Loan Program;
Rural Development Loan Program;
Rural Economic Development Grants.

New Farm Bill Programs Under USDA
In addition to tax and tariff provisions (above), the 2008 Farm Bill also
established several new biofuels incentive programs. Funding for these programs has
yet to be appropriated.

Biorefinery Assistance
Administered by: To be determined
Annual funding: $75 million in mandatory funding for FY2009, and $245 million in
FY2010 for loan guarantees, plus $150 million authorized annually for FY2009
through FY2012 — appropriations pending
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001 (P.L.
110-234)
Scheduled termination: End of FY2012
Description: Loan guarantees and grants for the construction and retrofitting of
biorefineries to produce advanced biofuels.
Qualified applicant: Individual, entity, Indian tribe, or unit of State or local
government, including a corporation, farm cooperative, farmer cooperative
organization, association of agricultural producers, National Laboratory, institution
of higher education, rural electric cooperative, public power entity, or consortium of
any of those entities.

CRS-8

Repowering Assistance
Administered by: To be determined
Annual funding: $35 million in mandatory funding for FY2009, to remain available
until expended, plus $15 million authorized annually for FY2009 through FY2012
— appropriations pending
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001 (P.L.
110-234)
Scheduled termination: End of FY2012
Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use.
Qualified applicant: Biorefineries in existence at the date of enactment.

Bioenergy Program for Advanced Biofuels
Administered by: To be determined
Annual funding: Mandatory funding of $55 million for FY2009, $55 million for
FY2010, $85 million for FY2011, and $105 million for FY2012, plus $25 million
authorized annually for FY2009-FY2012 — appropriations pending
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001 (P.L.
110-234)
Scheduled termination: End of FY2012
Description: Provides payments to producers to support and expand production of
advanced biofuels.
Qualified applicant: Producer of advanced biofuels

Feedstock Flexibility Program for Producers
of Biofuels (Sugar)
Administered by: Commodity Credit Corporation (CCC)
Annual funding: Such sums as necessary are authorized to be appropriated —
appropriations pending
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001 (P.L.
110-234)
Scheduled termination: None
Description: Authorizes the use of CCC funds to purchase surplus sugar, to ensure
the sugar program operates at no-net-cost, to be resold as a biomass feedstock to
produce bioenergy.
Qualified applicant: Producer of biofuels using eligible sugar as a feedstock

CRS-9

Biomass Crop Assistance Program (BCAP)
Administered by: Commodity Credit Corporation (CCC)
Annual funding: Such sums as necessary are authorized to be appropriated for
FY2008 through FY2012 — appropriations pending
Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001 (P.L.
110-234)
Scheduled termination: End of FY2012
Description: Encourages biomass production or biomass conversion facility
construction with contracts that will enable producers to receive financial assistance
for crop establishment costs and annual payments for biomass production. Producers
must be within economically practicable distance from a biomass facility. Also
provides payments to eligible entities to assist with costs for collection, harvest,
storage, and transportation to a biomass conversion facility.
Qualified applicant: Owner or operator of contract acreage that is physically located
within a BCAP project area

Department of Energy (DOE)
Biomass Research and Development Initiative
Administered by: National Biomass Coordination Office (a joint DOE-USDA
program)
Annual funding: $14 million per year through FY2007 ($12 million in FY2006); $11
million for FY2008
FY2008 budget request: $12 million
Established: FY2001 by the Biomass Research and Development Act of 2000, §307
(P.L. 106-224); program extended and mandatory appropriations provided bythe
Farm Security and Rural Investment Act of 2002, §9008 (P.L. 101-171); program
extended and funding authorization expanded by the Energy Policy Act of 2005,
§941 (P.L. 109-58) — currently authorized at $200 million per year
Scheduled termination: End of FY2015
Description: Grants are provided for biomass research, development, and
demonstration projects. Eligible projects include ethanol and biodiesel demonstration
plants.
Qualified applicant: Wide range of possible applicants
For more information: [http://www.brdisolutions.com/default.aspx]

CRS-10

Biorefinery Project Grants
Administered by: Office of Energy Efficiency and Renewable Energy
Annual funding: For FY2008, $186 million appropriated for the biomass program —
not all of this funding will go toward biorefinery project grants
FY2008 budget request: $179 million for entire biomass program
Established: FY2001 through funding authorized in various statutes
Scheduled termination: None
Description: This program provides funds for cooperative biomass research and
development for the production of fuels, electric power, chemicals, and other
products.
Qualified applicant: Varies from year to year, depending on program goals in a given
year
For more information: [http://www.eere.energy.gov/biomass/]

Loan Guarantees for Ethanol and Commercial Byproducts
from Cellulose, Municipal Solid Waste, and Sugar Cane
Administered by: DOE
Annual funding: Not specified
FY2008 budget request: $0
Established: 2005 by the Energy Policy Act of 2005, §§1510, 1511, and 1516 (P.L
109-58)
Scheduled termination: Varies, depending on specific program
Description: The Energy Policy Act of 2005 authorizes several programs to provide
loan guarantees for the construction of facilities that produce ethanol and other
commercial products from cellulosic material, municipal solid waste, or sugar cane.
Qualified applicant: Private lending institutions, to guarantee loans for the
construction of biofuels plants

DOE Loan Guarantee Program
Administered by: DOE
Annual funding: $5.3 million for administrative expenses; authority for $38.5 billion
in loan guarantees for energy projects in FY2008, including $10 billion for renewable
energy and energy efficiency
FY2008 budget request: $2 million for administrative expenses
Established: 2005 by the Energy Policy Act of 2005, Title XVII (P.L 109-58)
Scheduled termination: Not specified
Description: Title XVII of the Energy Policy Act of 2005 authorizes DOE to provide
loan guarantees for energy projects that reduce air pollutant and greenhouse gas
emissions, including biofuels projects.
Qualified applicant: Private lending institutions, to guarantee loans for clean energy
projects.
For more information: [http://www.lgprogram.energy.gov/]

CRS-11

Cellulosic Biofuels Production Incentive
Administered by: DOE
Annual funding: $25 million total authorized for all fiscal years
FY2008 budget request: None
Established: 2005 by the Energy Policy Act of 2005, §942 (P.L 109-58)
Scheduled termination: Not specified
Description: Section 942 of the Energy Policy Act of 2005 authorizes DOE to
provide per-gallon incentive payments for cellulosic biofuels until annual U.S.
production reaches 1 billion gallons or 2015, whichever is earlier. DOE accepted
comments on the program through July 14, 2006; DOE has yet to promulgate
regulations.
Qualified applicant: Any U.S. cellulosic biofuel production facility that meets
applicable permitting requirements, as well as any financial requirements set by
DOE.

U.S. Customs and Border Protection
Import Duty for Fuel Ethanol
Administered by: U.S. Customs and Border Protection
Annual funding: N/A
Established: 1980 by the Omnibus Reconciliation Act of 1980 (P.L. 96-499);
amended by the Tax Reform Act of 1986, §423 (P.L. 99-514; extended by the Tax
Relief and Health Care Act of 2006, §302 (P.L. 109-432); further extended by the
Food, Conservation, and Energy Act of 2008, §15333 (P.L. 110-234)
Scheduled termination: December 31, 2010
Description: A 2.5% ad valorem tariff and a most-favored-nation duty of $0.54 per
gallon of ethanol (for fuel use) applies to imports into the United States from most
countries; most ethanol from Caribbean Basin Initiative (CBI) countries may be
imported duty-free.
Covered Entities: Fuel ethanol importers
For more information: CRS Report RS21930, Ethanol Imports and the Caribbean
Basin Initiative, by Brent D. Yacobucci; Senate Finance Committee, Summary of
House-Senate Agreement on Tax, Trade, Health, and Other Provisions, December
7, 2006.

CRS-12

Appendix. Summary of Federal Incentives for Promoting Biofuels
Table 1. Federal Biofuels Incentives by Agency
Original
Authorizing
Legislation

Administering
Agency

Program

Environmental
Protection Agency

Renewable Fuels
Standard

Mandated use of renewable fuel in gasoline: 4.0
billion gallons in 2006, increasing to 7.5 billion
gallons in 2012

P.L. 109-58
§1501

N/A

None

Internal Revenue
Service

Volumetric Ethanol
Excise Tax Credit

Gasoline suppliers who blend ethanol with gasoline
are eligible for a tax credit of 51 cents per gallon of
ethanol

P.L. 108-357
§301

N/A

End of 2010

Small Ethanol Producer
Credit

An ethanol producer with less than 60 million gallons
per year in production capacity may claim a credit of
10 cents per gallon on the first 15 million gallons
produced in a year

P.L. 101-508

N/A

End of 2010

Biodiesel Tax Credit

Producers of biodiesel or diesel/biodiesel blends may
claim a tax credit of $1.00 per gallon of agri-biodiesel
(produced from virgin agricultural products) or 50
cents per gallon of biodiesel from recycled products

P.L. 108-357

N/A

End of 2008

Small Agri-Biodiesel
Producer Credit

An agri-biodiesel producer (see above) with less than
60 million gallons per year in production capacity
may claim a credit of 10 cents per gallon on the first
15 million gallons produced in a year

P.L. 109-58

N/A

End of 2008

Description

FY2008
Funding

Expiration
Date

CRS-13
Administering
Agency

Department of
Agriculture

Original
Authorizing
Legislation

FY2008
Funding

Expiration
Date

Program

Description

Renewable Diesel Tax
Credit

Producers of renewable diesel (similar to biodiesel,
but produced through a different process) may claim
a tax credit of $1.00 per gallon.

P.L. 109-58

N/A

End of 2008

Credit for Production of
Cellulosic Biofuel

Producers of cellulosic biofuel may claim a tax credit
of $1.01 per gallon. For cellulosic ethanol producers,
the value of the credit is reduced by the value of the
volumetric ethanol excise tax credit and the small
ethanol producer credit — currently, the credit is
valued at 40 cents per gallon. The credit applies to
fuel produced after December 31, 2008.

P.L. 110-234

N/A

End of 2012

Special Depreciation
Allowance for Cellulosic
Biomass Ethanol Plant
Property

Plants producing cellulosic ethanol through
enzymatic processes may take a 50% depreciation
allowance in the first year of operation, subject to
certain restrictions

P.L. 109-432

N/A

End of 2012

Bioenergy Program

Reimburses ethanol and biodiesel producers for
feedstocks necessary to expand operations

P.L. 101-171
§9010

$0

Expired: End of
FY2006

Renewable Energy
Systems and Energy
Efficiency Improvements

Grants, loans, and loan guarantees for the
development of renewable energy projects and energy
efficiency improvements

P.L. 101-171
§9006

$36 million

Scheduled: End
of FY2007

Value-Added Producer
Grants

Grants to independent producers for the development
of value-added agricultural activities, including
biofuel production

P.L. 101-171
§6401

$19 million

Scheduled: End
of FY2007

CRS-14
Administering
Agency

New Farm Bill
Programs under
USDA

Original
Authorizing
Legislation

FY2008
Funding

Expiration
Date

Program

Description

Biorefinery Development
Grants - Unfunded

If funded, would provide grants for the development
and construction of biorefineries, including biofuel
plants

P.L. 101-171
§9003

$0

Scheduled: End
of FY2007

Business and Industry
(B&I) Guaranteed Loans

Loan guarantees for various projects — could be used
for biofuels

Various
statutes

Approx. $1
billion

None

Rural Business
Enterprise Grants

Grants to finance and facilitate development of small
and emerging rural business enterprises

Various
statutes

Approx. $40
million

None

Biorefinery Assistance

Loan guarantees and grants for the construction and
retrofitting of biorefineries to produce advanced
biofuels

P.L. 110-234
§9001

N/A

End of FY2012

Repowering Assistance

Grants to biorefineries that use renewable biomass to
reduce or eliminate fossil fuel use

P.L. 110-234
§9001

N/A

End of FY2012

Bioenergy Program for
Advanced Biofuels

Provides payments to producers to support and
expand production of advanced biofuels

P.L. 110-234
§9001

N/A

End of FY2012

Feedstock Flexibility
Program for Producers of
Biofuels (Sugar)

Authorizes the use of CCC funds to purchase surplus
sugar, to be resold as a biomass feedstock to produce
bioenergy

P.L. 110-234
§9001

N/A

None

Biomass Crop Assistance
Program (BCAP)

Provides financial assistance for biomass crop
establishment costs and annual payments for biomass
production; also provides payments to assist with
costs for biomass collection, harvest, storage, and
transportation

P.L. 110-234
§9001

N/A

End of FY2012

CRS-15
Administering
Agency
Department of
Energy

U.S. Customs and
Border Protection

Program

Description

Original
Authorizing
Legislation

FY2008
Funding

Expiration
Date

Biomass Research and
Development Initiative

Grants for biomass research, development, and
demonstration projects

P.L. 106-224

$11 million

End of FY2015

Biorefinery Project
Grants

Funds cooperative R&D on biomass for fuels, power,
chemicals, and other products

Various
statutes

$186 million
total for
biomass
R&D
program

None

Loan Guarantees for
Ethanol and Commercial
Byproducts from Various
Feedstocks

Several programs of loan guarantees to construct
facilities that produce ethanol and other commercial
products from cellulosic material, municipal solid
waste, and/or sugarcane

P.L. 109-58
§§1510, 1511,
and 1516

N/A

Varies

DOE Loan Guarantee
Program

Loan guarantees for energy projects that reduce air
pollutant and greenhouse gas emissions, including
biofuels projects

P.L. 109-58
Title XVII

N/A

None

Production Incentives for
Cellulosic Biofuels

Authorizes DOE to provide per-gallon payments to
cellulosic biofuel producers

P.L. 109-58
§942

N/A

August 8 ,2015

Import Duty for Fuel
Ethanol

All imported ethanol is subject to a 2.5% ad valorem
tariff; fuel ethanol is also subject to a most-favorednation added duty of 54 cents per gallon (with some
exceptions)

P.L. 96-499

N/A

End of 2010

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3ARL33572. Public record. Not legal advice.